Chinese, U.S. talks on trade taper off; Trump’s new list of tariffs blamed
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Compiled by Democrat-Gazette staff from wire reports
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July 12, 2018 at 4:30 a.m.

Commerce Secretary Wilbur Ross testifies at a House Appropriations Committee hearing on the Department of Commerce budget, on Capitol Hill in Washington, March 20, 2018.

High-level trade talks between the U.S. and China have ground to a halt as President Donald Trump's administration threatens to escalate a trade war that shows little sign of abating, according to five people familiar with the matter.

The countries held three rounds of formal negotiations since May, led by U.S. Treasury Secretary Steve Mnuchin and Commerce Secretary Wilbur Ross and Vice Premier Liu He in China. But communications between senior members of the Trump and Xi administrations have petered out, and there's no immediate plan to restart the formal talks, said the people, who spoke on condition of anonymity because the deliberations aren't public.

The diplomatic impasse makes it unlikely the two countries will stand down anytime soon from an intensifying trade war that is roiling financial markets and threatening the broadest global upswing in years.

The Trump administration on Tuesday released a proposed list of an additional $200 billion in Chinese goods to be hit with tariffs. China's Commerce Ministry said the tariffs, which cover everything from refrigerators to handbags, are "totally unacceptable."

Washington and Beijing now have about seven weeks to strike a deal or dig in for a trade war that could upend corporate supply chains and raise prices for consumers. The new tariffs are scheduled to take effect after Aug. 31, when the administration's consultation process ends.

The U.S. trade representative's office didn't reply to an emailed request for comment on the negotiations and the Commerce Department directed queries to the White House, which didn't immediately respond. A Treasury Department spokesman said the agency doesn't comment on the secretary's engagement with counterparts.

"It's extremely important that when two governments get into this kind of situation with each other that even if they are fighting on the official front, that they have something going on in the background that enables them at some point to declare a sort of ceasefire," Rufus Yerxa, president of the National Foreign Trade Council, said in a Bloomberg TV interview on Wednesday.

"For the time being the two sides aren't going to acknowledge that. They're positioning themselves for the endgame."

Tuesday's tariff list marks a new phase in the U.S. trade war with China. Before now, the administration had deliberately avoided imposing tariffs on consumer goods in order to spare U.S. shoppers from direct economic pain. But the latest list -- 6,000 products -- included consumer items ranging from baseball gloves to seafood, vacuum cleaners, toilet paper, burglar alarms, agricultural products, handbags, hats and furniture -- a group of items that, by themselves, account for nearly one-quarter of the $200 billion in Chinese goods that would be subject to the new proposed tariffs, according to data compiled by trade research firm Panjiva.

Other products that would be affected include window-mounted air conditioners, Christmas lights, car parts, refrigerators and roughly $350 million of frozen tilapia filets, according to data from Panjiva.

Of all the frozen tilapia the United States imports, roughly 83 percent comes from China.

Bovine semen is targeted for the 10 percent tax along with dog leashes, bricks, caviar and caviar substitutes, frog legs (fresh, chilled or frozen), more than 40 categories of tobacco products, hair from horses, pigs and humans and something called "vegetable hair."

Hipsters and anyone else coveting the porous, soft-tipped luxury of badger-hair shaving brushes will be affected, as the bristles also made the list published by the trade representative's office.

The tariffs might even affect some of the "Make America Great Again" hats sported by many of Trump's supporters. David Lassoff, a company manager for California-based Incredible Gifts, buys the hats from China and embroiders them in the United States.

Lassoff said he has tried to acquire the hats from American manufacturers, but customers are unwilling to pay more. Incredible Gifts sells the hats for $16.99 on Amazon.com; Lassoff said they might cost twice that if they were made in the United States. If the tariffs were imposed on Chinese-made hats, he said, he would consider acquiring them from another low-cost country like Vietnam.

For now, Lassoff is hoping that the big companies that sell them, like Walmart and Amazon, are lobbying against the tariffs.

"Consumers will feel it and perhaps as early as Christmas," said Mary Lovely, an economics professor at Syracuse University who studies trade.

The Trump administration admonished China on Wednesday for failing to abide by World Trade Organization rules and threatened to double down on its unilateral approach to punishing Beijing's alleged trade abuses.

The U.S. is considering actions "outside the WTO" to curb China's trade abuses, Deputy U.S. Trade Representative Dennis Shea told a meeting of trade officials at the WTO's triennial review of China's trade policies in Geneva.

"This reckoning can no longer be put off."

White House spokesman Lindsay Walters said U.S. officials have had high-level talks with Chinese officials on "multiple occasions in the past few months" and have made clear U.S. concerns about the country's trade practices. "The Trump administration remains open to further discussions with China, but it is important that China finally address the long-standing concerns that have been repeatedly raised," she said.

Tensions within the Trump administration over trade are also complicating matters, according two people familiar with the matter. As the spokesman on economic matters within the Cabinet, Mnuchin took the lead early in the negotiations. But at different points in the talks, other more hawkish members of the administration have taken the helm, such as Ross, which has confused the Chinese.

Trump himself is frustrated with Beijing's reluctance to offer more concessions, especially after the U.S. reversed a decision to slap crippling restrictions on Chinese telecom-equipment maker ZTE Corp., according to a White House official who declined to be identified.

The U.S. last month agreed to lift the measures after ZTE pays a record fine and consents to management changes.

On Wednesday, the Trump administration said ZTE took another step toward ending a U.S. ban after ZTE signed an escrow agreement. The company must now deposit $400 million in escrow.

The president also believes China hasn't been helpful enough in U.S. efforts to persuade North Korea to abandon its nuclear weapons program, said the White House official.

Sen. Charles Grassley, R-Iowa, said he had a "great deal of concern" about the trade spat with China and the level of uncertainty it's creating among farmers and businesses in his state. Futures for soybeans, a target for China's retaliation, have fallen about 16 percent since the end of May, as the trade conflict was heating up.